Cigna earnings beat by $0.04, revenue topped estimates
On Thursday, Wells Fargo downgraded shares of Doximity Inc (NYSE:DOCS), a digital platform for medical professionals, moving the rating from Equal Weight to Underweight. The firm also reduced the price target on the stock to $19.00, a significant drop from the previous target of $27.00. The adjustment reflects concerns over the company's growth trajectory, particularly within its primary revenue source, the Biopharma sector.
The downgrade stems from survey results that suggest a potential deceleration in revenue growth for Doximity. Wells Fargo's analysis indicates that while Biopharma is Doximity's main growth driver, accounting for approximately 70% of its revenue, the expectations for a +9% top-line growth in fiscal year 2026 may be overly optimistic. The firm’s projections are more conservative, forecasting only a +6% increase.
The analyst from Wells Fargo expressed reservations about the likelihood of Doximity achieving the double-digit biopharma-related growth that current consensus estimates assume. According to the firm's survey, assigning a base case scenario for such growth is challenging, suggesting that Doximity's revenue tailwinds are slowing down.
This reevaluation by Wells Fargo implies that Doximity's growth path may align with market trends sooner than previously anticipated. The lowered price target and downgrade to Underweight serve as indicators of the firm's revised expectations for Doximity's financial performance in the coming years.
In other recent news, Doximity, Inc. reported a strong financial performance, exceeding its fourth-quarter revenue guidance with $118 million and achieving a 13% year-on-year growth, culminating in $475 million for fiscal year 2024. The company's adjusted EBITDA margin stood at 48%, with $56 million in Q4. Doximity also announced a new $500 million share buyback program.
In terms of future projections, Doximity forecasts Q1 2025 revenue between $119.5 million and $120.5 million, and $506 million to $518 million for the full fiscal year.
On the analyst front, Barclays maintained an Equal-weight rating on Doximity with a steady price target of $31.00, while Truist Securities increased the stock's price target to $31.00 from the previous $29.00, maintaining a Hold rating. Both firms highlighted the company's strong fourth quarter and first quarter headline beat, and the initiation of a $500 million share repurchase authorization.
In other company developments, Doximity's recent integration with Perplexity aims to bolster its platform, potentially increasing its appeal to physicians. Despite concerns about revenue growth deceleration, particularly in the health systems segment, Doximity continues to be a significant player in the healthcare technology sector.
The company's offerings, which facilitate networking, collaboration, and career advancement opportunities for healthcare professionals, along with its robust customer base, demonstrate its market standing and prospects.
InvestingPro Insights
In light of Wells Fargo's recent downgrade of Doximity Inc (NYSE:DOCS), it's worth considering additional insights from InvestingPro. Notably, Doximity's management has been actively buying back shares, signaling confidence in the company's value. Moreover, Doximity holds more cash than debt on its balance sheet, providing financial stability and flexibility. These InvestingPro Tips suggest a strong internal belief in the company's prospects and a solid financial position that could support future growth.
From a data perspective, Doximity boasts an impressive gross profit margin of 89.34% for the last twelve months as of Q4 2023, indicating efficient operations and strong pricing power. Additionally, the company's revenue growth for the same period stands at 13.45%, which, despite concerns about future growth, reflects a healthy recent expansion. With a market cap of $5.38 billion and a P/E ratio of 40.69, Doximity is valued highly by the market, which may factor into the expectations for its growth trajectory.
Investors interested in a deeper analysis can explore more InvestingPro Tips, including the company's trading multiples and profitability forecasts, available at InvestingPro. For those considering a subscription, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 12 additional InvestingPro Tips available for Doximity, offering a comprehensive understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.